tv Squawk on the Street CNBC July 14, 2009 9:00am-11:00am EDT
all right, our guest host today steve forbes has a new book out. it's called "power ambition glory." this is fascinating stuff. jack welsh you compared to cyrus the great and hank greenberg you compared to julius caesar. >> yes, well times and circumstances changed, the essence of leadership does not change. that's a constant throughout history. i think people can take lessons, both the good lessons and cautionary lessons from this. on the caesar's side, you will grab great achievements, but part of what happens is you start to believe you're a living god and you get struck down. we see it happen all the time in the corporate world. we also cite examples in this book of those who control their
inner caesar like walter reston at citigroup knew where to draw the line, some don't. you see it time and again. cris crisis, you're always going to be hit by crisis, the key thing also is innovation, one good example we cite -- >> i wish we had time. >> come back? >> i would love to. good to see you. thank you. >> make sure you join us tomorrow. "squawk on the street" is coming up next. live from the financial capital of the world this is "squawk on the street." good morning, everybody. i'm mark haines. what financial meltdown? goldman sachs easily beating profit expectations, on strength in trading and underwriting business. david faber on a call with goldman's cfo right now will bring if us all the headlines. >> great to have you back, mark. mark and i have been betwikt and between but together again..
goldman sachs surpassing the record, pretty amazing.g. on the economic front, investors are looking at stronger than expected retail sales, okay. so that's solid but then the biggest jump in wholesale prices since last 2007, maybe that will go away but we'll go inside those numbers. >> picture right now is not good bad, but not too bad either. we needed 116 to get to fair value so it's even steven. >> goldman sachs is up 5.5% yesterday in anticipation of these numbers being that strong. but what about on the economic side? we've got our market roerpts in place. bob pisani, welcome back. >> good to be back. goldman sachs, down about 1% on the news, but great nuns here t beat on the top line. bottom line terrific. you see the top line numbers, $13.76 billion, well ahead of
the estimates of roughly $11 billion. fixed income, great numbers on debt trading, underwriting as well. anyone else going to beat these goldman style numbers? street seems to doubt it. they've been outperforming everybody else. johnson & johnson beat on the top line but look below the hood, weak pharmaceutical sales, also a problem with the dollar. full year guidance in line with expectations. look at some of these numbers here on csx, metal shipment down 53%. chemical down 20%. bottom line is volume are still very weak here. cit group up 22%, reports that the government may step in and help them out here. finally the stimulus package isn't going to be televised. martin marietta, their numbers, guidance for the year, well below expectations, one, the
weak u.s. economy and second, the numbers they're getting for the stimulus pack archg the kind of numbers they need tour their business aren't coming in. trader talk.cnbc.com. how are we looking at the nasdaq. >> on the warning track today, dell down about 3%. dell says we're selling nor computers but they're the lower end which also means our margins are getting squeezed because costs are going up on some of their components. sun also saying it's going to post a wider loss than some of the estimates out there. nonetheless, oracle thinks with the sun acquisition, that will be a predict to earnings. novella, also a chip maker, second quarter estimates were lower. third quarter lower as well.. doesn't seem to be applying to applied materials. its rival. take two interactive, delaying it's big game bioshock 2. the biotechs. nova pharmaceutical has a
treatment for hot flashes, it's also getting bought out for japanese pharma by $15.16 a share. almost there now. and seqeunom said hpv tests work better than rivals. up nearly 7%. let's head over to the nymex and sharon epperson. >> i'll pick it up. we're seeing oil prices back up 60 bucks a barrel. tracking equities a bit here. peter beutel of cameron hanover points out that even though higher equities don't necessarily equate to higher economic growth, oil trade verse tended to trade up oil in light of higher equity prices. yesterday, they finished the day only slightly lower. that is crude oil prices in the face of higher equity prices and today they are track higher in the face of those higher equity prices as well. ray carbone says that hasn't
been a factor. he anticipates that will continue and yesterday what we saws were a short covering rally that may or may not continue but he does anticipate that oil will continue to track equity prices. mark, become over to you. >> retail sales rising 0.6 of 1% in june. second straight monthly increase. gains led by a surge in gasoline prices. just when you think it might be good news. and there was a slight rebound in the auto secretator. wholesale prices rising more than expected in june led by energy. the ppi, which tracks the costs of goods before they reach stores are, up 1.8%, biggest jump since november 2007. all right. let's check the markets. rally in asia overnight. japan's nikkei up 2.3%. they had been suffering a nine session losing streak.
hong kong up 3.8. shanghai jumping, too. india's bombay up 3.4. australia up 3.5. guy johnson in london, what's going on where you are, guy? >> we're up here as well, mark. we are holding onto the gains that we made yesterday. i'm going to show you a couple of charts in just a second. they look remarkably similar, but up around 0.7 of 1% in london. backed up by 0 upon 8. in london, bastille day. the markets are open, but everybody is enjoyings holiday in paris and across france today. let me show you the stocks 600 over the last seven days. notice this big rally yesterday. up by 1.2%. i'm going to walk over and you how is the banking chart. looks similar, inspired by those meredith whitney comments, making gains, but everything they're talking about here is
we're holding on to that gains at the moment, up by 2.5%. goldman's with a blowout number. everybody expecting it, it seems. priced in yesterday, we're holding on to things.. a lot of people are talking about the next leadership, who is going to drive us out of this downturn?? a lot of people are betting money on what's happening in green technology. let me talk about the world's largest solar cell producer. it is q-cells based out of germany. we have had a whole host of profit warning, today, we got another one down by 14%, the stock. erin, back over to you. >> guy, hitting on two of the key issues that bernie mcsherry and i wanted to talk about. bernie with cut tone and company guy was saying goldman's 5.5% gain yesterday, their numbers were expected in a sense, but banks this morning in europe are holding onto the gains up 2.5%.
what do you read into that? >> i may use an oxymoron, if there's company we expected to beat expectations, it's goldman sachs. so that's factored in. later, jp morgue and sachs. the merrill guys contributing to the guy or do they still have the handcuffs on, we'll find out. >> we're still talking about the headline here. equity surpassing 2000. it will be amazing to see if anyone else can match that. on the economy side, and guy was just mentioning, the largest so solar cell company, how it was down on another profit warning. you were noting, if you take out energy from retail prices -- >> if you think about it, 1.8% on producer price but 1.5% if you take out energy cost. if you pull out auto sales and gasoline sales, you're kind of
flat, so not a lot of direction going on there. i'm looking forward to seeing how companies are doing their top line. you can only cut costs so far. i think a lot of companies have cut to the bone. we're going to have to see e revenue from the top line. >> we're going to be focusing on top line. goldman sachs. >> they did all right there. >> up to you, mr. haines. >> up next, earnings central in full swing. joe and carl are in the zone. >> thanks, bernie. >> then street fight, got a bull who says there's money to be made in can't assumer staples and a bear who says shorting is the the only way to go. and a deep dive into the numbers from johnson & johnson. should the household name find a home in your portfolio?
with me, erin, i got a little mail from a former colleague who said i look thin. >> he thinks he looks thinner on this set, erin. >> you're loot svelte.. i'm not investigating you very closely. >> and sometimes the folds in my shirt that sometimes deceive people into thinking i'm fat are gone. this a slow burn to the way the earnings season starts. that's okay, because we need to ease into it. but shares of goldman, going to be tough to trade higher today after that 8-point move yesterday. yesterday, able to hold on, that was no small feat. it was a big blowout number. but given what meredith whitney said yesterday and given the expectations that had been ramping up, still a good number, 4.93 which was ahead of the $3. and revenue rose year over year,
better than expected. you figure the bonuses are going to be big. you're going to hear rumbling and grumbling, but you want goldman sachs to make a lot of money to pay taxes to the government to fund all of this. >> i think the grumbling is going to be outshown by the happiness people have and the profits. do you think whatever action we would have seen today got stolen into yesterday. >> maybe a hill bit. but if the overall market can do well 20ed, it's got j&j supporting it, too. a totally different segment of the economy and marketplace. >> j&j, dow component reported on $1.11 s was $1.15? >> $1.15. exitems. that $1.11 was the estimate. and mike huckman is monitoring the conference call at j&j. stint sales down 39% during the
quarter and a lot more with analyst less frontliner over at miller staybatayback. just to come back from that weight around your ankle is tough. >> down around a dollar and details on that acquisition of cougar. >> cougar biotechnology. >> i don't know. what does it mean? i don't know. >> women in their mid 50s and their pool boy. >> i don't know. i don't know. we'll have to ask katie couric. after the beal, keep an eye on intel.l. revenue of $7.3 billion. you must be the apple of a cougar's eye. >> on the air! . we're going to watch intel and a bunch of other numbers. we'll be back in the next hour with a lot more. yum also after the bell, right.
>> you and becky? >> oh, really? >> and then becky and me. >> we'll work out schedule later on. >> you have three different people, how many different combinations. >> three, right? >> so that's perfect. >> we are the e team. >> we are the e team. >> don't be jealous. >> mark is staring at you closely. >> you know why i envy joe? >> why? >> because he's got enough hair to get a bad haircut. >> i'm going to get it cut. >> i don't have enough hair to get a bad cut. >> it's not a bad cut, mark. it's just that -- >> it's that chia. >> i'm doing the ed kooky burns thing today. >> that didn't do well with the ladies? >> joe -- >> joe kooky kernan. >> can you just show us your side profile. i want you to know your derriere has nothing on mark's famous one. >> that's just a fold in his
shirt. >> you have a no butt, unlike the famous haines bottom. >> up next, how the option market is reading the results from goldman. and what it's saying out of earnings for jpmorgan, ge and the stock, which must not be named. later, live with insiders from the treasury and feds who clearly have very different ideas on who is in charge. recent example, cit. "squawk on the street" coming back.ad ou need? ou need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions. morgan stanley smith barney. a new wealth management firm with over 130 years of experience.
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all righty. here's where we stand on the futures. we've rallied a bit and are now above fair value. could get maybe 15, 20 points on the dow at the o what do we have? ten minutes until the opening bell. let's get the buzz beyond the big board and see how the options market is reacting to goldman and how it is setting up for more key reports this week. joining us from the cboe, andrew keenen, independent trader. what's going on, options for say goldman sachs, jpmorgan or ge? >> goldman sachs is aindicated down about a dollar right now. after the july $1.50 straddle went down around $8. ing on a -- >> back up. what's the straddle? >> the right to buy or sell the stock at a certain number. ohfy bought that, the july 1.50 straddle.
you could buy or sell the stock at $1.50 and pay $8 for that right. >> i got ya. so you could go either way. >> right. so goldman sachs would have to trade $142 or 158. obviously trading around 1.48 right now. so the price of the straddle and the volatility is going to come in a little bit. >> this means the trok is going -- >> the stock is indicated down right now. they blew out their number. goldman sachs was up yesterday on meredith whitney's comments. they blew out their number. but everybody knew they were going to blow it out. it's not like when google or rimm blows it and nobody hears about it. i think goldman sachs will indicate the rest of the market for the rest of the day. >> anything to be learned from the action at ge? >> ge has earnings on friday, trades on a lower volumetity. that's a money straddle at 70 cents. so the indicated move is pebl 6% in ge by friday. we have jpmorgan earn arings on
thursday as well. so you know, goldman sachs will indicate where the other stocks trade today. all right, thank you very much, appreciate it. >> thank you. the final countdown to the opening bell coming up on the other side of the break. >> all right. >> once again, futures mildly positive. >> what is goldman sachs talking about? we'll find out.
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plus get $100 cash, when you open an account. welcome back to "squawk on the street." i'm david faber, just off a call with the cfo david finnier of goldman sachs. unbelievable earnings this morning from that company. not unexpected in anyway.y. even the number that came out seems to be a bit more than many people hadden aanticipated. record revenues for the quarter but not report earnings. nonetheless look at the numbers. we've been through them a bit as
well. second quarter earnings up 65%. revenues 13.8 billion. that is a record rers suss what was 10.664. you see it right there. eps, $4.93. when you take out the dividend they paid to the government from they redeemed t.a.r.p., you get $5.71 a share. and there you see net and net revenue which was a record. much of this, most of it coming from trading principal investment. that's the key. now on the call, unfortunately i didn't get to ask this question, honing some some way we could get some sense of where the bulk of the profitability of in trading and investment came from because goldman doesn't tell you a great deal. fixed income, currency and commodities, you see the bulk of that profitability, they made all sorts of different money in the credit area and equities, a lot of this trading as well.
principal investments did not figure nearly as prominently in the overall profitably. that $10.78 billion number was up 93 percentage pointses from previous numbers in 2008. one year ago. all right, let's move onto the balance sheet as well. interesting here. total assets actually declined 4%. $890 billion. when you lock at total shareholder's equity, you want to figure out your leverage ratio, easy enough to do, isn't it? it's about 14 times so not a large leverage ratio at quarter's end here. continues to come down and equity continues to rise. there's back value, goldman trading well above book at this point. diluted share count, 520 million compared to 450 million shares a year ago. up 15%, of course, a lot of equity issuance has taken place over the last year for every financial company including goldman sachs. so that's your diluted share count. as for capital positions here.
we are talking about a bank now. 13.8%. they say their total capital is $254 billion. level 3 assets always interesting to look at. did come down a bit, but still a hefty number, $54 billion. let's take a look at one area that wasn't particularly strong and i've talked a great deal it about it. and that is m&a advisory. a huge franchise for goldman sachs. nonetheless, net revenues, $368 million. 54% lower than the second quarter of 2008. that did reflect as you might expect a lot less m&a. as for compensation bep fits. $6.65 billion. a full 49% of net revenues for the first half of the year. on the call, mr. finnier did say a couple of things. he said hey, listen, we did a lot of basic block and tackling. our profits wered is widespread and clients facing businesses on the subject of cit, asked
whether or not they had written down any of the loans, he said we are well secured. no writedowns. he did edadmit there's a lot le risk capital available in the market, therefore those who are taking risk are going to be rewarded or significantly for taking that risk. he said there's been very little change in our own risk taking. again, i didn't get to follow up with any questions. as for head count which is down to 29,400, i'm believe it was down, down about 16% over the year. they 35,000 employees at goldman sachs a year ago. he did say that count will go up in the third quarter as they add a lot of college graduates to their ranks. he thinks they're pretty well staffed for the current environment. so there you have it, at least some breakdown of those very strong numbers at goldman sachs. no sense being given about his expectation of the current quarter, but many expect, mark, the capital markets will not be as strong. back to you. >> thank you, david faber.
you're watching the opening bell. >> they were late. >> they were a little late, yeah. pro shares listing credit suisse, 130/30 etf sticker. at the nasdaq phase forward, sticker pfwd.. they provide software products, celebrating their sixth listing anniversary. >> let's get to our market reporters. 82.35. where are we going to go bob pisani. >> the important thing is the futures were up, bear in mind, we're jostling around because of the ppi and that's thrown people for a bit of a loop. a lot of analysis going on. retail sales, a lot of discussion about that here. here's goldman post just open flat, down about a dollar preopen. now it's 1.49 here.
you heard david's story. i won't go through the whole thing but record movement over there in the fixed income area. 13.76 billion, well above expectation of 10.66 billion and the question is is anybody else going to post those kind of beats at this point.. the street seems to doubt that the important thing about johnson & johnson, they beat opt top line. a lot of these companies look under the hood here. u.s. sales down 6.7%. number two, pharmaceutical sales were weaker than expected. number three, questions, issues concerning the dollar for them. that often happens.s. they did affirm their full year guidance. same with csx. they beat on the top line. look below the hood again here, you'll see cost cutting benefits but the volume were very weak here. so freight volume down 21%. coal volume down 21%. metal shipments down 53%. shares of cit group doing better this morning. a report out in the wall street journal that the government may step in and help them out.
finally, i think, very interesting is what happened with martin marietta. they lowered their expectation for the full year. the bottom line is this is the big stone construction company in the united states outside of vulcan materials. they specifically cited a weaker u.s. economy and number two, longer than expected delays in the federal stimulus project moving to the construction stage. in other words, they're not getting the money from the federal they thought they were getting at this point in time. firstname.lastname@example.org. b bertha, how are we looking at the nasdaq? >> off five points or so. the big event tonight is going to be intel earnings. starting a bit to the up side. expected to earn 8 cents with revenues over $1.25 billion. look at the at tmaker as an economic indicator f they have demand, that means perhaps the economy is starting to pick up.
novellis does say books are up. had been lower ahead of the open. we are seeing chip strength here equipment sector. dell is issuing a warning, they hold an analysts meeting today. the company does see sales lightly is higher in the second quarter but the shift is town to cheaper computers where costs are higher, so m m are lower.r. as a result dell off 3.5%. google will be reporting this week as well. a huge week for tech earnings.. over at oppenheimer they are cutting the estimates on google. they think it may have lost market share to microsoft's bing. but are also raising the target. so a little bit of a tug-of-war on google. warning for the next two quarters, it won't launch until the next fiscal year.
noven pharmaceutical, the big win on a takeover. rebecca jarvis is at the nymex. >> thank you, bertha. lows up about a buck 30 right now. with the short covering rally under way according to ray c carbone. traders here say they are watching the equity markets for a sense of direction. not only as an indicator of things wanting to move higher, i.e., oil as an asset class and the other other kmodfy ties but also as potential future growth. that is to say there is positivity on the horizon, take it from the market. peter beutel of cameron hanover says that so far we have not seen stocks equate as far as them moving higher to economic growth in the future. also a handful of analysts saying that fundamentals could
improve and opec raising their forecast for 2010 saying consumption looks like it's going to be up about 500,000 barrels a day versus the previous year estimates. mark, back over to you. >> thank you very much. our pharma pharoah mike huckman on the j&j call.l. what are the highlights? >> this call is more than an hour old, but i wanted to share a few bullet points with you. the ceo bill weldon isment to on this call. a few bullet points to share with you. number one, talk about competition. there used to be a duopoly in the highly coated stent business. now there are four manufacturers. so j&j saw drug coated stent sales fall by a huge 59% to just $70 million. the price came down about 5%. the cfo saying on call, we're seeing hospitals putting some
pressure on price for products they're willing to buy from us. moving on, i'm quoting him again, he called it one of the most challenging quarters in our history for year over year comparison. finally, bob pisani mentioned. the company did affirm its earningsie guidance but put out on the call slightly higher revenue guidance of $62 billion versus the $60.3 billion consensus but the cfo said d that's solely, solely due to currency changes. become to you. >> thank you very much, mike huckman. time now for a bull-bear street fight. there's money to be made in certain consumer staples. david theis. all i have to do is say the name and you know what he's going to say. he's bear market strategist at federated investors.. he says shorting is the only way to go, but we want to start on
an up side. what do you got? >> i think financial armageddon is over. you saw goldman's numbers today. the capital markets are opening up. having said that, oven corrections an consumers, i would stay with the necessities and what consumers are going to use not just here in the u.s. but internationally. so you got companies like colgate have pricing overseas, advertising costs coming down, so you're going to make money on 3% dividend yield and 5% earnings growth.h. you can make a bear case at any time but there are opportunities. >> our other guest has proven that many times. >> certainly, consumer staples are a safer way to play that. and we believe that the financial system is functioning through the good graces of government intervention..
john mauldin just wrote a piece yesterday talking the $5 trillion governments are needing to borrow over the next year. you know, the numbers are massive. certainly the economy is doing slightly better however we think the markets discounts that and we don't think the green shoots are going to turn into trees. >> let's just get straight to what you're saying, david. yesterday, we had a guess on who was saying that the haines bottom, we could go 25 to 50%, not even that bottom below where we were are in november. >> no way. >> and clearly haines is beg to defend it. but david, would you make the case to mark why the bottom will dive? >> we certainly believe we're going to test that bottom mark. we might have a rally from there, it's very uncertain. there's certainly a lot of liquidity in the system. however, we do think we're going to break through that haines bottom.
this is an unbelievable circumstance, mark, that trillions of dollars of debt in the system. we have essentially wiped out the investment banks in this company. we have decimated 20% of household net worth. this is not a garden variety recession, this is no inventory recession, this is big. the stimulus packages are not really working to a great degree at all. >> i think, you know, yes, there's a lot of credibility to that. but you also are very -- you're just in the section or third inning in the stimulus package, you've got stabilization occurring, companies talking about opportunities finally, they've actually stopped looking back, they're looking ahead.d. and if you focus on certain sectors like the stap ales, like life sciences and you focus on specific companies, even in technology, look at the balance sheets, look at the leverage, the gross margins, the cash. there is opportunity to be made
but yes, you can stay away from the retail space and financial companies that do/undo consumer credit but over the next two or three years, there's going to be money made an we will have volatility because things are very different from what we've seen. oil prices have come down, hopefully they'll stay down. and companies have a lot more ability to grow through the next few years. >> and your names in particular, talking mostly health care and consumer staples, right? you're not looking for any great growth, you're looking for a gdp like population growth. >> i think you might get one or two%, but if you stick with great overseas exposure companies. >> sell the cheap soap and all. >> that procter & gamble, you can do a lot of industrials overseas but low leverage, too, so you have to look at the balance sheet and not just consumer centric focus in the u.s. >> david, if you're going go
with your fear that we're going to test that bottom again, you're going to go with the stereotypical gold but also silver and platinum. >> yes, we think that resource stocks and resource are where you should play. were had oil about $70 before this recent decline, we'll admit this decline in bond yields and selloffs surprise us to a degree. markets will do whatever possible to surprise the most people, however we think commodities will rally again, the reinflation trade is on and we think geld and silver will protect you from a currency that has bounced and declined significantly. >> that is too two days in a row that people have come on with a violent attack on you. >> um -- i'll tell you right now, my bottom will hold. up next, the faber report. david has got more on cit and goldman. >> later, can the world's b
biggest concert promoter keep people spending money on concert tickets as the country continues to struggle. ceo of live nation right here on "squawk on the street." you're the colon lady! diarrhea, constipation, gas, bloating. that's me! can i tell you what a difference phillips' colon health has made? it's the probiotics. the good bacteria. that gets your colon back in balance. i'm good to go! phillips' colon health.
all right, let's talk a little bit more about goldman sachs, not doing much of anything in terms of stock. you heard bob pisani talking about it. up yesterday, back it a level few would expect it would inhabit as little as six months ago. goldman sachs reporting record revenues for the quarter for the second quarter of 2009. almost record earnings but not quite. return on equity 23%, i'm looking back well below, for
example, the 36% that they reported in the third quarter of 2007, for example, but take a look at the numbers. can we do that, eps $4.93. if you take out the dividend they pay the government, $5.71 net, net revenue. post of most of the it coming from thing and principal investment, largely the trading that went on at goldman sachs. that's of course, you don't get a great deal of granularity of a what this exactly means in fixed income currency and commodity. was it high yield? trading of mortgage products, equities? we get a little bit of detail, not a great deal. 30% higher than in '08. so yeah, higher net revenues and derivatives, to a lesser extent principal strategy and net revenues were unchanged compared
to the second quarter of '08. commissions declined. and they say equities operated in an environment characterized by solid client driven activity. and that's what david vinnier in a press call said as well, in terms of their clients facing businesses it was widespread in terms of profitability of the franchise. as for the balance sheet, as i pointed out earlier, they continue to shrink assets but not that much, $890 billion, down 4%, but that has the effect of reducing your leverage ratio, the case here. assets probably not made up of quite as nasty a mix as it might have been previously for any number of shares. book value, goldman one of the few i believe, maybe i'm wrong in saying this, trading above book and there's the diluted share count. that is taking earnings per share a bit lower perhaps than the past simply because they've got so many shares outstanding
at this point. also a lot fewer employee, it's worth mentioning, we all sur mize. they never really give you a press reless on that. let's look at the year over year numbers. do we have those numbers? did we not get it this time either? about 29,400 people versus 35 thousa ,000 a year ago. so 16% reduction. negatives here, a $700 million loss on commercial mortgage loans. that was a part of fixed income currency and commodity. that is interesting. again, i want to exsome sblor that more, hoping to get a call back hoping to get more. warren buffett, some of you may be wondering about, he's well in the money. he's getting paid 10% for $5 billion and then another $5 billion, thank you very much, in warrants, exercisable at $115. he's well in the money. those warrants have a five-year
life. way to go, warren. all right, erin, back to you. >> thank you, mr. faber. up next, stocks on the move including burger king and caterpillar. both on our list. johnson & johnson also trading higher. after beating the street. we'll talk to an analyst who went in more bullish than his peers. what did he discover? >> and a great story here on the wire we'll get into later. you're watching "squawk on the street" here on cnbc. q
good morning, "squawk on the street" people, let's take a look at some stocks on move here today nesto style. let's start off with the two worst performing stocks. it's health is net and humana. they lost the contract with the defense department to provide health insurance. aetna and unh will take over that contract. let's take a look at burger k g
king, downgraded from neutral to buy. down 3% on the news. also on the peak is the call from credit suisse on cat p caterpillar. they think is facing bear sentiment and inventory issues. then a long-term bullish call on the building products makers mohawk and oco owens corning, the pink panther people, overweight from underweight.t. they think earnings will normalize in five years. that's a good long-term bet. five years. erin, there's a old saying, nothing gives god a laugh like extolling your five-year plan. >> i can't wait until later in the program when we get to tell mark a an investment that is expected to come to fruition for five years. we'll save that right now, one other stock to watch on the earnings front. dow component j&j, you heard mike huckman talking about the earnings call. it was higher, now lower. profits were better than expected. you heard mike's soumry of the
call. let's go into the call with less taback. what did you hear on the call? >> i heard what was expected. currency was a problem. in quarters past, the consumer division and also the medical twice division did better than expected, the consumer products division was worse. >> people like them, but they're higher end, there are much cheaper alternatives on grocery store shelves if you're willing to give up brands. are people or not? >> it appears they're seeing some erosion on the high end but you know, they are expanding geographically so that's offsetting some of that. the one consumer product that
has gotten a lot of attention lately is tylenol with the recommendation last week from the panel. though the company -- >> about not taking as much of it. >> the company was, i would say a little circumspect about that it's about a $1 billion product. >> yeah, i would think that would be a problem for them. les, in your notes, you were looking forward, this quarter will continue to trend weak pharmaceutical. what about at pipeline? >> well, the biggest product or the most important product in our view was river rock also known as orelto, it's been de y delayed by the fda until the fourth quarter at least the filing time, the one positive is that the fda isn't asking for additional clinical trials, just looking for the all trials suggesting that it's going to work in 4q. that could be a significant blockbuster. >> how would you describe the
pipeline, good, weak, strong, what? >> relatively speaking, they're in pretty good shape. >> okay. >> compared to the other pharma companies. >> all right, thank you very much, les. appreciate it. >> no problem. >> our full court press on earnings central continues in the next hour of "squawk on the street," including a look at what you need to know before intel reports. >> plus econ recon. guess who is back, thank god, steve liesman, to go inside the numbers. >> the old professor. >> he's been doing a little bit of fishing. i didn't catch fish. steve would have got a 30-inch fish. we'll be back.
my annuity from fidelity means my retirement income is safe. it's guaranteed, no matter what happens. if guaranteed income for life sounds good to you, do what i did -- let fidelity be your guide. call fidelity at... for details about guaranteed income for life. the producer price index jufrd last month 1.8% for june, the biggest increase since
december. and the retail sales rose 0.6%. and florida money manager charged with defrauding investors of $14 million andousing the money to buy luxury cars and other goods. that's cnbc.com news now, i'm courtney reagan. live from the financial capital of the world in the heart of lower manhattan, this is the second hour of "squawk on the street," i'm erin burnett, mark is in. i know he didn't do the live but she getting ready to talk to you in just a couple of moments. turns negative. lower across the board. 21 for the down. down for the nasdaq and the s&p 500 as well. we do have inventories coming out, we'll give you those headlines right now. we have may business inventories down 1%. the expectation was for a decline of about 0.8%. why am i getting a different number than you have. april was 1.3, but the expectation to compare the drop to is the 1.8 that i indicated.
so worse than expected on inventory. that's been the big focus as we all know. inventories are coming down. at what point are we going to start to see any sort of a rebuild that could contribute to broader gdp growth. there you have it, the market down 15 points. one other headline to share with you, on the skwort justice nominee, sonia sotomayor. she got to answer questions yesterday, she only spoke for eight minutes but she does she does not see any ethnic, racial or gender group having an haven't in, quote, unquote, sound yuchlt. perhaps that could be -- well, you read into what you will about affirmative action. mark, down to you. >> thank you, erin. down here nt 0 floor with bob pisani as the market is sitting -- >> look, energy is back up. you know what a laggard energy has been as oil prices have been coming through the floor recently. 72 to 60, energy has dramatically underperformed the
markets. financials are giving back a little bit of gains, goldman still positive. much of of those gains i didn't understand. despite the meredith whitney call, giving back a little bit. if you look below some of the earnings calls and reports that happened this morning. you could see notable weakness compared to what happened last year. so johnson & johnson came in line with expectation here. the important thing is that if you look under the hood, sales are down almost 7% in the united states. pharmaceutical sales were notably weaker. yes, it's important they reaffirmed expectations. the market has built this in. this isn't shocking news, but understand in context, how weak things are. and csx, the railcar business. they ship volume all over the united states. they beat expectation. why? because they've become cost cutting champion, they've all become cost cutting champions, but look at the volume, look at
what share shipping. volume down 20% in most of the major categories here. most of the coal shipments were down 20%. metal shipments down 50%. some of the other things, overall freight volume down 21%. all right if the street had that in the bag, that's fine, but still you've got to be aware that this is still notable on the weak side. martin marietta, even if em don't pay a lot of attention to stone and construction company. they lowered their expectation not just on the weak economy, they're not getting the stimulus money, all the money they were expecting is not happening. it's not it's that never going to happen but they made it it very clear they were disappointed. they haven't seen the money yet. so martin mayor yrietta is strug recently. >> what bothers me is if you look at the broad brush statistics, the government reports, et cetera. you can see reasons to maybe be hospital mistick. but if you look at the corporate earnings reports, they are almost across the board not pointing to any kind of
significant recovery. >> yet.. and a that's why it's not a bad idea to have the pause that we have had in the month of july, it makes intellectually it makes sense. if you read these reports. not just reading the headlines, don't stop looking at and that read the year over year declines here, you're not seeing significant moves to the up side. >> right. >> so no matter whether the analysts have it built into their models or not, the weakness is still there. that's why this pause makes a lot of sense to me. >> not a lot if you read the corporate results. okay. who's over at the nas? is it bertha? >> me, is it i, i guess is the correct thing. >> what's going on with dell? >> dell is trading to the down side. you know, they're hold iing the analyst meeting today. ahead of that they gave some guidance saying we're seeing a little bit higher revenue for the second quarter, slight increase, but our margins are getting pressured because what's happening is people are buying
the cheaper pcs, our component costs are up. so they're not able to wring out that profit with regard to the cost, dell is up about 6%. we're not seeing a tremendous amount of collateral damage, although microsoft is off 9 cents. the news on microsoft, trying to do some cloud computing to counteract google's entrance. sun microsystem saying things are going to come in a little bit below expectations but oracle now off 1% says they still think that the sun field is going to be a credit for them, add about $1 billion for the first year, $2 billion in the second year. >> what about intel? i believe they report this afternoon, don't they? >> they do. the interesting thing about intel is it's getting a halo event from novehllus, which missed on their second quarter earn expectation.
they might break even in the third quarter. so chip equipment makesers trading to the inside and a lot of people are see seeing that as good news and what it might be seeing as inventory on chips and maybe might offer a little bit of a better outlook than we heard from dell. back to you. >> all right, bertha, thank you. back up to erin. >> mark, i'm looking at crude, up a dollar. let's get to rebecca, she's at the nymex with the latest on the energy trade. >> what we are seeing sheer consolidation of positions this morning. it's a short covering rally according to ray carbone of paramount options, we've seen this major leg down in the energy complex the last couple of weeks. oils prices, energy complex, they've all come off, where we were standing ahead of yesterday's session was essentially at these eight week lows, as a result of that, you could call what's taking place here a bit of profit taking off this leg down. traders are consolidating those positions, there's all this
curiosity that perhaps this earnings season is going to suggest to recommend that the future will be higher going forward. that is to say that things will look better going forward and as a result of that, there are certain traders out here that are taking new positions in terms of new optimism, new bu bullishness going forward. also, opec coming out with their adjustments for 2010. they say it it looks like consumption is going up about 0.6 of a% because of the increase in industrial production from the present time. erin, back up to you. >> thank you, rebecca. now a trio of economic reports, we've been talking about them, retail sales, there was an increase there. best in five months. wholesale prices, people worried about deflation, maybe the jump up was positive. well, it was the most since november 2007.. take out energy, nineither one those reports did anything. and business inventories just kim out as you saw more than expected in may. thank goodness she back. what was the biggest fish you caught?
>> you know, erin, i'll save that for the end, i think the story is the biggest fish i didn't catch.. i'll get to that in just a second. >> all right. we'll save it for the end. what about the econ numbers. let's get to something -- >> i want to trade notes with you. not a lot of green shoots, erin, in these numbers this morning. maybe the one green shoot is in the business inventory. as you say, the ninth straight decline. in general, you want more business inventory drawdown in a quarter that you think is going to be negative than you do less. so the greater than expected drawdown is good for the second quarter, already a writeoff, that may help us out with inventory rebuild in the third quarter. remains to be seen if the demand will warrant that. let's go to the inflation numbers, which surprised on the up side, as you said, mostly because of energy. the ppi up 1%, the consensus looking for 1%. core rate 0.5%. again, looking for unchanged there. looking inside the numbers is what you see is consumer goods up 2.2.
energy leading the way with a 6.6% gain. inside that, almost a 19% rise in gasoline prices. autos up 2%. that was a curiosity. intermediate goods up 1.9 and crude goose up 4.6. so maybe more inflation in the pipelines looking down the road or historically here, you'll see we haven't had as much deflation or disinflation a you might have expected compared to 2001 where it was a serious deflation. getting to retail quickly. again, it was up, it was positive, but because of the internals it didn't lead to that much cheer on the street. up 0.6, ex-autos up 0.3. and may up 0.5. autos pushing ahead to aat a 13% annualized rates, most think we can't sustain that. a lot of discretionary stuff. department stores minus 1.3.
eating establishments, 0.9%. so the discretionary stuff taken on here. you can see year over year, we're just bouncing on the bottom with a 9% decline.e. so erin, when it comes to the numbers from my vacation, the ones that mattered were 1, 40, 30, 150, i hooked one tuna, i fought it for 30 minutes, had he spit the hook 30 feet from the boat. we estimate the fish 150 pounds. >> he spit the hook 30 feet you said? >> i battled that fish for 40 minutes and i wanted to kill myself. >> oh, wow. what annan credible story. >> with my captain jeff smith, by the way, who is a terrific captain. >> everyone should know, steve is a fantastic fisherman. >> well, thank you for that. maybe not as good as i thought. >> well, thank you. we've got some great pictures, we'll bring them on one day, steve holding a fish as tall as he is. s.e.c. chair mary shapiro,
that's not here, but she's appearing before the house subcommittee at this hour. she's going to be talking about bernie madoff and the challenges the agency face. she expects to get a report from an internal watching did on how the agency missed madoff's $65 billion ponzi scheme. she'll expect that report in the next six weeks. hanson pearson are s there as there are headlines he'll keep bringing them to you throughout the morning. right now, scott cone is on madoff watch outside the prison in north carolina. good morning, scott. >> good morning, erin, it stands to reason that the government t would want to pull off an operation like this very, very carefully. that operation being the moving of bernie madoff to this prison complex in nk butner, north
carolina. he has left atlanta but the bureau of prisons will not confirm this is where he is headed. he weren't to attend some secrecy to this because bernie madoff is 71 years old, his health is questionable. he has a lot of information presumably that they can still get out of him and there are people who clearly don't like him, they want to move him as uneventfully as possible. that seems, together go on right now. this facility in butner, north carolina is again a complex of facilities, a couple of medium security institution, low security institutions and also notably a medical facility that is highly regarded in the federal prison system and one prison consultant told us it is likely made offwill be brought there for evaluation, mother mental and physical and that that may be an intermediate stop before he goes somewhere else in the prison system, we don't know, and the bureau of prisons is not saying yet.
if he winds up here, he will have the opportunity to to some jobs, he can earn some money, this wall street titan can earn about 12 cents to 40 cents an hour cleaning toilets, going doing gardening work. that is yet to come. we'll keep you posted. >> cleaning toilets. thank you very much. we'll get moreup dates from scott as we get more information there. up next, back to earnings central nerve center for more analysis of other headlines of the day. especially those intel numbers expected after the close. then the faber report, david is going to go inside those goldman numbers because the more you look. plus former steel town turned green lead, pittsburgh, pennsylvania is gearing up to host the g-20. did you know in a ranking of cities around the world, the number one city in the entire united states of america was ranked pittsburgh. city's mayor is here next. (announcer) this is nine generations of the world's most revered luxury sedan.
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goldman sachs and j&j, we've been mentioning just two of the morning headlines this morning. let's get to the earnings central nerve center. carl has upgraded. becky quick is there now. >> could i have downgraded though? that's an interesting question. >> he's watching in the gym, he's going to come back and harass us. but we know you speak the truth, erin he knows we love him. investors still buzzing about goldman numbers. expectation and the results that
the investment banking giants delivered. shares at this hour, we're asking ourselves whether or not the rally that might have come as a result of these results was stolen by yesterday's rally. >> in fact, dick bova was saying just that. this company has a clear a high hurdle because goldman sachs was up by $8 yesterday and yet today still in positive territory. >> by 70 cents or so. second quarter earnings $4.93 a share sharply ahead of expect agricultures. revenue up 46% year over year, better than expected $13.8 billion. mary thompson is on the conference call and will be back with the latest in a little bit u but you look at all the year over year oppose profit and positive revenue came from trading and principal investments, a lot of competitors are gone. >> that makes it a much different field than it was. yesterday, we talked with meredith whitney. she said you're watching the municipal bond business as states and localities have to
raise money to do these things. when you talk a dick bova and jeff hart this morning, they both say over the long term, it could be fits and starts but they're positive on this stock. jeff was saying $1.8 o dick bova was talking about 200, maybe up to 250. >> maybe the only bank in the country that can change its business model from quarter to quarter and is nimble and some say paranoid enough do that on a revolving basis. well see what happens later on, but certainly not a bad way to get the earnings season under way, right? >> also johnson & johnson, the dow component out with its earnings today, that's a stock to watch today as well. company came in with earnings of $1.15 a share. 4 cents ahead of expectation. revenue is going to show you right in line with revenue. this is a diversified health care company.y. also talked about how it's
reaffirming its full year outlook. it's been very important that the analysts said this is great news because this company is staying ahead of things, not just the impact of what you see from currency but they're staying on top of the dilution that you see and the other deals they're doing. they're maintaining this and being able to stay on top of things even with the dilution they see from the line. >>en at currency effects of being a global company. and as one analyst told us this morning, the downgrading effect consumers using maybe generic baby powder and pharmaceuticals. other devices. >> right and his point was you don't see anything really roo session proof. mike huckman has been listening in on this conference call. he's telling us johnson & johnson is calling this one of the most challenging quarters in this company's history, and it's a very long history. >> those two big number, erin. more tonight after the bell. intel is going to be huge. the tech giant seen earning 8 cents a share. revenue of almost $7.3 billion..
we'll be watching for those numbers when they hit and everybody will be back with more on the call later on today. >> you both, we look forward to seeing you and now let's move across probably about 10 or 15 feet away from where carl and becky were -- it's not joe, who i guess is sensibly on the bike. but david.d. >> yeah, they keep them like behind this curtain. people just want me to be alone here, i think. they don't really want anybody getting near me, i guess, i wish they were right here so i could talk to them a little bit. you heard becky and carl talking about goldman sachs. let's take a quick look. no need it it go over it for a third time here, but i will mention it briefly. take a look at in terms of the t two-year performance of that stock. quite something to watch from the lows where it was below $50 a share, back because you see to $150 a share. after a very strong quarter indeed for this quarter.
we've gone through so much of what goldman saw. no real and we see what they say in the 11:00 analyst call but on the press call, the cfo would not give any sense as to the current kwurt or projectionses a to capital market activities saying it's simply too early to say anything given we've only even two weeks of this quartz. many expect we won't see quite the activity we saw in terms of capital markets. as for something that did pop out at me, $700 million loss in fidc on commercial loans and a $500 million loss in real estate principal investments for goldman sachs. i don't know specifics of that real estate investment loss, but one would guess some of it has to do, if not all of it, with commercial real estate and that's a key area of concern.n. we've talk and it a great deal here, the royal "we" on the f
faber report. and this just out by the way, bloomberg reporting these numbers from kushman and wakefield, interesting in light of what we were seeing with goldman sachs. the manhattan office vacancy rate rose to 10.5% in the second quarter. that was the largest single drop in office rents that you've seen in quite some time, falling by a report 7.4% in the second d quarter. you see it there. $60.23 a square fit. you wonder what that will happen to the reits that own a good deal it of those offices. take a look at these two, there are many others to look at. gre sl green is more the office space than markets. with that vacancy rate being what it is, one might imagine we'll see the square footage
rent fall a good deal further from here. that sparks concern overall about these firms and certainly about a lot of the loans that are backing the buildings that were based on far higher rents per square foot. that's tstill a story to come. mark, back to you. >> thank you, david faber. up next, first on cnbc, the mayor of pittsburgh. on gearing up for the g20. reviving a former steel economy. and more. >> later, the ceo of live nation, another exclusive interview withboreson will talk about the pending merger with ticketmaster and whether there is hope on people spending money on concerts in this slowdown. we'll be back. we need to send an expert. a walking, talking...
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the big board. kind of a mixed bag here. citigroup, cit group and general electric up. bank of america or baml down on the nasdaq. only intel is up among the most active. powershare, dell, oscien farm that intel and microsoft all down. >> now that the g8 summit is over the attention moves to the g20. the host is pittsburgh, pennsylvania. a lot of people were surprised to hear that around the world. let's hear what that means to luke ravenstahl, the mayor of pittsburgh. to have you with us, sir, we appreciate it. >> good thing to be here. good morning. >> one thing that caught my attention is when economists came out with the rankings around the world, the best city in the united states to live in was pittsburgh, but people sort of think, well, pittsburgh, they think of it saz a steel town, what makes pittsburgh so great? >> well, we're a wonderful city
and we do fight an image problem across this country, and we'll be first to recognize it, but we're also very proud of what we've done. we're a city that has really reinvent itself. we're not a steel down anymore, we have a very diversion economy from information technology to financial services, health care, higher education. we've survived this economic downturn rather well, i think part of the reason that the president picked pittsburgh to host the world in september. >> and what are the biggest -- if you were to say, used to be a steel town, what is pittsburgh now? what makes your city economically viable?e? >> i mentioned all of those sectors, but the real drafr of our k34i now is what we refer to here as eds and meds, higher education and health care and medical institutions throughout the city. they are in many ways recession-proof.
they've in the fourth quarter of 2008, for example, grew jobs, when the rest of the world and the rest of the country was losing them. so our higher education institutions and our health care giants here in pittsburgh have really allowed us to diversify, allowed to us have a good stable economy and really has put pittsburgh on the map as a city where it's a good place to live, a good place to raise a family and of course a good place to have a business or make a living. >> is this going to be a net plus or net minus from an economic standpoint? >> it's definitely a net plus. there's no doubt it's that going to cost us money to keep our residents safe, to keep the world leaders safe, but that's a small cost as you compare it to what pittsburgh will experience on really the global spotlight being on this city for that week in september. we're excited about it. the businesses and corporatios s here are excited about it. we have over 300 companies in pittsburgh that are global in nature, they have their roots
here in pittsburgh but are global companies that will give them a tremendous opportunity once again to highlight pittsburgh, to talk about the wonderful city that we have and of course a great business opportunities that are available here and so we'll host the world in september for those couple of days. but more important for us, we think we have an opportunity to capitalize on that long-term to grow this economy to create jobs and to create good positive opportunities for miss businesses across the world. >> almost out of time, two more question, first one, did you lobby for thissen or orr did the president just call and say, you're it? >> well, the president called and suggested that we were on a short list of cities that was being considered and of course, we were very pleased to hear that we did everything that we could. the good news is earp lultly selected. we didn't lobby for it, necessarily, but once we were aware that we were a potential site, we did everything we could and fortunately we were are chosen. >> the last question, nate
mclouth trade, good idea or bad idea? >> i think it's a good idea. i'm a young mayor i've gone through 16 consecutive losing season, we're used to this, but the new okay, the new leadership of the pirates is focused on right things. so hopefully it's good news, not necessarily this year, but two or three years, hopefully this trade will prove to be a good one. >> mayor luke ravenstahl of pittsburgh. >> s.e.c. chair. >> mayor shapiro appearing before the house capital markets subcommittee at this hour. she will be grilled about the bernie madoff scandal and current state of the s.e.c. you can watch her testimony live and uninterrupted on our website, cnbc.com. >> which story do you want to do first? >> oh, definitely the one that was sitting -- >> the blowing up of plants in your favorite country. >> got to love the french. workers at a failed french car
parts supplier are threatening to blow up their factory. they claim to have rigged it with explosive gas canisters unless renault and peugeot come up with extra compensation for them. >> $42,000 is what it equates to that they would like each. >> now, this soon escalation from earlier problems. earlier this year, france was hit by a wave of boss sb nappings, workers would kidnap the boss, i love the story. they would hold him again to try and get better separation pay, things like that and then the story says most ended without violence. i don't know what -- >> hey, america, this could be coming to you. wilbur ross told me the other day he thinks we're going to be the next france. not argentina or japan, france. mark, do you remember how long it was ago and some of you are
viewers may remember this conversation, we had people talking about alg avenue. as an alternative fuel and there was some scoffing going on. exxon mobil which has been vociferous in saying it didn't want anything to do with alternative energy. it has now smelled the coffee. >> or the algae. >> they aren't saying they believe in it or not, $600 million they are announcing in algae. so their biofuel program is all algae. the comment here which is an interesting one.e. i wish the person we had that made this case is that algae is made up of a lot of the same components as traditional petroleum. >> right. >> so that means the existing infrastructure if algae ends up working could handle the algae as opposed to having to rebuild everything from scratch, i.e., pipeline, gas stations, but they said five to ten years best
case. it's a drop of oil in the bucket. >> we're going to run our cars on pond scum. i wonder what exhaust will smell like. >> well, better or worse than when it runs on the oil from chinese food. >> that's good. i like that. >> mark probably drives behind those cars. >> oh, yeah, the ones that run on mcdonald's waste oil. >> what about the ones that are going to run on manure? >> the manure, that's another -- >> what about the tease, ben? coming up, broadening the fed's power, too much too soon or the best options of all the horrible options we have to choose from. we'll talk about that next. qaqaa
let's show you the market internals. look at that gmac declaring a differ dend on preferred stock. $271 million under the t.a.r.p. program. need i remind you that gmac is also known as ally, the bank that won't admit they're part of gmac. >> those are the ones where they have ads where they torture children. >> ubiquitous ads, they are
everywhere. let's show you the internals. there they are, mark. this happened yesterday, too. literally on the new york stock exchange it was closer than this. dead heat, the market going up and done and got a bit of a bounce. we'll see if happens today. on the nasdaq, declines outpacing advancers. >> the fed and u.s. treasury are extending the definition of systemic risk. now they're including small businesses. still a course of disagreement though over what the fed's role should be when it comes to overseeing risk. is it a natural fit to give the feds supervisory authority over institutions deemed too big to fail? or the fed taking on too much and moving away from its primary aim of fighting inflation? here to weigh in, alan blinder, professor of economics at princeton university and a former vice chairman of the federal reserve. and john taylor, former undersecretary of the u.s. treasury for international
affa affairs, senior fellow at stanford university hoover institution, so author of "the road ahead for the fed," must be hard to get all that on a business card. let's start with john. what's wrong with the fed overseeing systemic risk? >> i think it dilutes their focus on the goals of keeping the overall economy stable and keeping inflation low which is its key. you give an agency too many things to do and it loses its focus. i also think it creates some concerns about the credibility of the fed when it gets involved in these institutions too much, you can see that already a lot of questions, it's a conflict of interest and possibly a loss of independence, too. so seems to me the proposals do raise a lot of questions about too much power for the fed. >> alan, you've been there and done that. what do you think? >> well, i haven't done that, which is what john is arguing, but i very much disagree. i think giving the fed supervisory authority over very large institutions as you put it, too big to fail
institutions, is a natural economic policy. you don't get economic stability without financial stability, this is all about enhancing financial stability. furthermore, i don't see who else could possibly do this job, the fed is only viable candidate. so if you say the fed shouldn't do it, it's tantamount to saying the job shouldn't be done. >> i think what the specifics are is the fed is going to choose on its own account certain institutions which it thinks are threats to the financial stability, that's a huge responsibility right there. you don't know where it will stop. and so it could go too far, i think. >> two quick question, the first is on this cit situation, it's clear in the cit situation regardless of what you think the outcome should be for cit, how important is it it is for lending in his country to small businesses that is currently the front line of a turf war between the fdic and the treasury and
the fed. john taylor, is that the way to look at it? i mean is this a situation where we are seeing a turf war determine the future of a company and access to credit? >> well, you don't want to have turf wars like that in fact, one of the proposals i liked is out there in the administration's proposal is to create a council where people would come together, be chaired by the treasury secretary so you deacon flikt these problems and make sure there aren't gaps. that's what we need. we don't need a whole new set of new powers, we need to make sure the existing powers are coordinated properly and i think the cit case is a good example. >> a final word to you, alan blind, your name has been bloated out there as a potential replacement for ben bernanke, obviously, you were are formerly vice chair at the federal reserve, it is a job you would want if it were available? i'm not asking to you judge ben bernanke in any way, if it were available, would you want it? >> lie judge ben bernanke. he's done a great job. anybody would be flatered to be
talk about tour that job. rumors float all the time, erin, i don't pay much attention to them. >> thank you very much, alan blind, john taylor, joining us. >> up next, julia borston about to sit down with the ceo of live nation. in another cnbc exclusive. >> live nation is trying to reform not just the concert business but the entire industry. i'll have a live interview after this break. companies on the planetl
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downturn in ticket spending. here with me is michael rapino. thanks so much for joining us. >> thanks, julia. >> concert tickets seem like an expensive expendable cost in this economy.y. shout business holding up? >> surprisingly well. most consumers go to two shows a year. we're holding up. last year was a super year for us. we're 5% up. not too many media entertainment companies with that story right now. >> you probably have a look at what's coming up based on advanced ticket sales. are you seeing the trends continue? are people continuing to buy tickets? >> we've got a strong summer. it's all about the bands. we've got youu2, madonna, cold play. we've got great artists out there and our business from now to the end of the year looks
really strong. >> live nation has been driving ticket sales with no-fee wednesday, is this working?g? is this the reason for success. are you taking lower margins. >> 40% of our ticket are unsoempld our job is to fill the building. we want every seat filled when that artist gets on stage. one of the great motives right now it in this economy is price points. ticket prices are expensive. if we can provide value to the fans and drop the service fee part, we've sold half a million tickets in the last four or five weeks. >> but are you selling them at a lower margin for live nation? >> you're selling them at a lower margin but if they're incremental tickets it's new margin to us. we we expect 5% increase in ticket sales in incremental. >> you also get another piece of merchandise sales in the auditorium, everything from the beer to the t shifrt shirts. how is that business holding up? are consumers being cheaper on
that kind of thing? >> going into the year, the consumer theory was people wouldn't buy concert tickets and wouldn't spend here. our per heads are up 7 to 8%. those two shows, they're coming to the gibson, walking outside for a ber or hot dog. >> so right now, you're waiting for your approval with your merger with ticketmaster? what do you expect that to happen or will you get an concession to get it approved? >> twoer hopping to get it by the end of the year. we're in the doj process right now, going along as usual. we're not at a stage yet to talk about concessions. we think we have a strong case for the efficiencies, we'll get clo closer to the end to figure it out. >> what is the future of the musictory look like? if you have this merged company, you have a lot of 360 deals where you own a piece of the revenue from various artists. is that going to be the future of the concert business. >> the big really is about selling concert tickets an it's become an ecommerce business.
ticketmaster does a great job at selling concert tickets. both of us and industry got a change, 40% of the tickets are unsold. in a recent survey 60% of the fans said they would have went to the show if they knew about it. we as an industry have to do a better job of increasing the awareness of the show, decreasing the ticket price and making it a better experience online to buy tickets. we think using ticketmastery's platform, our concert platform, we can become the zappos or amazon of the concert business compare to where we are today. >> thank you for joining us. i appreciate it. erin back over to you. next, your preview of intel's quarterly results. talking about those being the key read of the day after the close. >> that's coming up this afternoon. but first, go trish! >> now it's really getting fun nichlt great to see you. coming up at the top of the hour, we have a great show
planned. for sarah palin writing a op-ed criticizing the president's cap? we're going to discuss and debate this one. plus, june retail sales stronger than expected. but you know what, the back to school season, that's a critical i critical time for retailers, is looking pretty weak.. what does this mean for you? right now, we're going to discuss. and we have a first on cnbc interview, we're going to be talking with marcie sims. lots ahead only on wee"the call" but first mark and erin are back right after this break.
technology bellwether, inte8 after the close today, it's going to be a very important set of numbers. here is where intel stands. you can see it today unchanged. but as you can see from the bottom, mark -- they don't even put that on the graphics. it says march low. >> it's the same. oh well, we all know the truth. >> we all know the truth. >> and let us talk about what's going to come out of these intel numbers, because it will be seen as a bellwether for leader tech. and then you face the cnbc
semiconductor analyst, and of course jim goldman is with us. so sdwrjim, what are we looking from intel?l? >> the simple numbers here, 7 $1/4 billion in revenue, the headline numbers everybody is watching. but 85% of this company's revenue comes from overseas customers, so anything the company has to say on the global macro economic condition will be absolutely key, whether the company reiterates the fact that the pc industry has bottomed and the momentum that intel is enjoying with the processor. intel is positioned well here, and if they can continue this momentum and give us indication that the back half of 2009 looks good, this is a stock that i think is going to move. >> all right.. kevin cassidy, what do you say to that point whether it will move, especially given that 31% jump since the march low? >> well, i think the -- the outlook might be seasonal which in our view is 7% over the
second quarter. and we think there could be a pullback, given its run-up in the first half of the year, but if there is a pullback, we're recommending buying on the weakness. we see many cat lifts in the second half of easy '09. >> intel is an overweight, right? >> that's correct. >> and amd just can't get there, can they? >> they're going through quite a few changes, and i think the new ceo, derek meyer is dying the right moves to get the company to the right size and target markets where they can be successful. >> jim, is that the way you see it? >> yeah. i mean, amd has been in disarray for so long, and we always talk about intel's rival, amd. for every 10 or $12 that intel makes, that's what amd does in a single dollar. so the rivalry has been really overblown now, and we're seeing nice innovation at amd, but the market acceptance out there on the consumer and on the enterprise just has not been up to snuff, and i think there is a
lot of frustration among amd investors. look for the solid company, the leader in its group, and that's why intel continues to gain the lion's share of attention on the street. >> kevin, can -- i mean, does amd have better products? >> well, intel is the manufacturing and technology leader. intel -- or i would say amd's product is good enough, there is nothing wrong with it. it's just intel is coming out with a barrage of new products, and especially at the low end, which in this tough economy is important. >> kevin, jim, thanks very much to both of you for taking the time.. and, again, those intel results coming after the close of trade this afternoon.n. okay. up next, we'll have a final check on the markets.s. we're just kind of meandering this morning. don't go away. closeout is here; hurry to get the pontiac you want before they're gone. the price on the tag is the price you pay. get a 2009 pontiac vibe for $13,708 after all offers. or get 0% apr for 60 months
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